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The Republic of Panama

Panama, officially the Republic of Panama, is situated in Central America between the Caribbean Sea and the Pacific Ocean. The territory is divided into 9 provinces, with their respective local authorities. Since independence Panama has developed its economy by creating a range of laws to make conditions more favorable for foreign investments.

  • Official language — Spanish. But English is used in most spheres.
  • Currency — Balboa, U.S. dollar (PAB, USD). The balboa has been tied to the U.S. dollar (which is legal tender in Panama) at an exchange rate of 1:1 since its introduction (1903) and has always circulated alongside dollars.
  • Main sources of Panama income are mainly based on a well developed service sector heavily weighted towards banking, commerce, tourism, trading and private industries, because of its key geographic location. The canal is of economic importance since it pumps millions of dollars from toll revenue to the national economy and provides massive employment.
  • Main act of legislation for registration of an international company in Panama - General Corporation Law № 32 dated 26th of February 1927.

Officially there is no term “offshore” in Panamanian law, but territorial principle of taxation allows registering companies which are exempted from any kind of taxation if do not run onshore business and do not own property in Panama.  More than 300,000 such “offshore” companies are registered in the country. 

Necessary information you need to know planning to register a company in Panama:

  • Registered type of company — Panamanian Corporation.
  • Company's name – must end with the following words or abbreviations: «Corporation», «Incorporated», «Societe Anonyme», «Sociedad Anonima», «Gesellschaft mit beschankter Haftung» or  «Corp.», «Inc.», «S.A.», «AG», «GmbH».
  • Registered address / Agent — company must have a registered address in Panama and a local registered Agent. The Agent presents a company to all state departments.
  • Authorized capital — standard amount of authorized capital is 10,000 $ (100 ordinary shares of par value 100 $ each, or 500 voting shares with no value). There are no terms of its payment.
  • Minimum number of directors allowed — three. They can be either natural persons of any nationalities and residence or legal entities. Information about directors is closed.
  • Minimum number of shareholders allowed — two necessary for registration, and then all shares can be transferred to single shareholder. Information about shareholders is closed.
  • Bearer shares – allowed. Must be fully paid when issued. Information about share issue and payment is not shown in the public Registry. 
  • Obligatory company staff — Director, Secretary and Treasurer. One person or entity can combine several jobs, but Director and Secretary must be different. There is no limit on maximum number of staff members. 
  • Limitation of offshore company activities - companies are neither allowed to do any onshore business nor to have property in Panama. 
  • Accountancy — company must keep its financial statements but there is no requirement to give any account or perform annual audit of the company.
  • Taxation — a company is exempted from any kind of taxation and must pay only fixed annual state fee.
  • Banking — the country is included into the 2nd group of the Central Bank of the Russian Federation direction (Appendix 1 to the Bank of the Russian Federation instruction dated on the 7th of August 2003 № 1317-У) and the «grey list» of OECD (Organization for Economic Co-operation and Development) according to the summary of Q20 sammit on 2nd April 2009. 

Advantages of Panama comparing with other offshore countries:

  • Registration of a new company in Panama takes 4-7 working days;
  • There is no state currency control or money transfer limits. It is allowed to receive tax exempt profit on bank deposits in Panamanian banks;
  • Banking sector has strict confidentiality. Panama does not follow legal decisions of other countries’ courts about tax crimes;
  • No requirements on the meetings of directors and/or shareholders;
  • No signed agreements on data exchange with other countries’ tax authorities;
  • There are agreements on avoiding taxation on profits received from the use of international sea and air vessels with some countries. Panama provides a tax exempt sea port.
  • Colon Free Trade Zone was founded in 1948, it is the second largest tax exempt area followed after Hong Kong. The area has more than 1000 companies registered there, an airport and 5 sea ports. More than 13,000 verssels under 84 flags of different countries cross the Canal annualy.
  • Panama is an international bank center with more than 70 foreign banks on ist territory. At about 20 banks have branches situated in Free Trade Zone. 
  • American dollar is used as a paper currency. 
  • Panama is not included into the „black list“ of Ukraine.